DeNaples wants to remain on FNCB board

Friday

May 4, 2012 at 9:02 AMMay 4, 2012 at 9:04 AM

Dave Janoski

Attorneys for Dunmore landfill and auto-parts magnate Louis A. DeNaples asked a federal appeals court Wednesday to block bank regulators from forcing him to resign from the board of First National Community Bancorp and sell much of his stock in the publicly traded company.

DeNaples' attorneys want the U.S. Court of Appeals for the District of Columbia to stay a decision by the Board of Governors of the Federal Reserve System that they say would cause their client "irreparable professional and financial harm." The stay would prevent implementation of the order while DeNaples pursues an appeal filed in Washington, D.C., last month.

On April 10, the Federal Reserve Board gave DeNaples 30 days to resign from the First National Community Bancorp Board, ruling that a 2009 agreement with Dauphin County prosecutors that led to the withdrawal of perjury charges made him ineligible to serve on the board of a federally chartered bank. The order also gave DeNaples 60 days to present a plan to sell his controlling interests in the Dunmore-based bank and another bank, Urban Financial Group Inc. in Connecticut.

DeNaples owns 10 percent of the stock in First National Community Bancorp and belongs to a group that owns nearly 20 percent, according to the Federal Reserve. The Federal Reserve order could also force family members or business associates who might work in concert with DeNaples to exert control over the bank to sell some of their holdings.

DeNaples has asked the Federal Reserve to review its decision, but it has yet to rule, according to the motion seeking a stay filed by his attorneys Wednesday.

The motion says DeNaples, who took a leave of absence from the bank board in 2008, would not attempt to return to active status while pursuing his appeals if a stay is granted.

"Absent a stay, the (Federal Reserve Board) Order will irreparably harm Petitioner, as it gives no assurance that Petitioner would not be forced to seek (the board's) authorization to return to First National," the motion argues. "The Order also irreparably harms Petitioner by requiring him to sell his controlling interests in First National and Urban Financial at a loss while his challenge to that requirement is pending before this Court."

First National Community Bancorp stock was trading at $3.75 per share Wednesday. It has plummeted from a high above $22 per share since 2007.

The bank, which reported losses of $31.7 million in 2009 and $44.3 million in 2010, has been operating with close supervision by the Office of the Comptroller of the Currency under the terms of a consent order it signed in 2011.

DeNaples, 71, was charged with perjury in 2008 and accused of lying to state gaming regulators about alleged ties to organized crime figures when seeking a license for Mount Airy Casino Resort in Monroe County. Under his 2009 agreement with prosecutors, DeNaples transferred ownership of the casino to a family trust controlled by his daughter and paid the costs of his prosecution in exchange for withdrawal of the charges.

Federal bank regulators ruled that agreement constituted entry into a "pre-trial diversion" program and made him ineligible to serve on a bank board or hold a controlling interest in a bank.

His attorneys have argued that the agreement did not represent entry into such a program.

Efforts to reach officials at the Federal Reserve Board were unsuccessful Wednesday.